Annual Leave accrual is something our HR advisors are asked a lot about at ProcessWorx, so we have come up with a guide to help answer your frequently asked questions.

When does an employee start accruing annual leave?

An employee’s annual leave accrues from the day they begin working, even if they are on probation, and builds up over 12 months. Casual employees do not accrue annual leave.

What rate is annual leave paid at?

Annual leave is paid at an employee’s base rate of pay for all hours of leave taken and does not include overtime, penalties or allowances. Awards, employment contracts or agreements, however, can specify different methods of payment and/or annual leave loading to be paid.

Do employees accrue annual leave while on leave?

Annual leave accrues when employees are on any form of paid leave such as annual leave, sick/carer’s leave, or long service leave. Annual leave does not accumulate when an employee is on unpaid leave, for example, unpaid annual leave, unpaid sick/carer’s leave or unpaid family and domestic violence leave. It is important to note for employees on parental leave, the Government’s Paid Parental Leave Scheme is not considered paid leave. Therefore an employee does not accrue annual leave while on the Paid Parental leave Scheme.

What hours do employees accrue leave on?

Under the Fair Work Act (2009) employees only accrue annual leave on their ordinary hours of work. An employee’s ordinary hours of work can vary between Awards and industries, so contact us if you are unsure. However, generally ordinary hours are 38 hours a week for full-time employees (pro-rata for part-time). Employees do not accrue annual leave on any additional hours worked outside their ordinary hours.

It is important for an employer and employee to agree on the ordinary hours worked in the employment contract, especially for part-time employees. If employers don’t do this, they may be required to recognise additional hours worked as ordinary hours and pay more accrued leave.

At ProcessWorx our HR consultants are experienced interpreting annual leave accrual and entitlements. If you have queries about the accrual of annual leave relevant to your business contact us on (08) 9316 9896, or email enquiries@processworx.com.au.

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Written by Danielle McNamee

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